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The Innovation Sandbox
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The “Innovation Sandbox” is a powerful creative thinking tool to drive Innovation, pioneered by C.K. Prahalad. In fact, using this framework, industries and individual organizations can achieve breakthrough Innovation. It promotes exploration and experimentation–while under extreme conditions.
For this framework to be implemented effectively, there are 4 core conditions that must be met:
- The Innovation must result in an offering of world-class quality.
- The innovation must achieve a significant price reduction. And, by “significant,” we mean the reduction in price should exceed 90% off the cost of a comparable offering in a “Western” country.
- The Innovation must be scalable.
- The Innovation must be affordable at the bottom of the economic pyramid. Serving bottom-of-the-pyramid customer base forces Innovation due to the extreme limitations intrinsic to serving this market.
This approach is called the Innovation Sandbox, because exploration and experimentation must be creative and free-flowing, like sand—whereas, being “boxed” in by rigid constraints. Take a look at the slide below to better visualize the “sandbox” metaphor.
Our constraints are captured by the frame of the sandbox. These core constraints are industry or market requirements that are extremely fixed. There can be more or less than 4 constraints. However, 4 is typically and there shouldn’t be many more or less.
The Innovations are illustrated inside the sandbox. With the constraints clearly defined, this then forces unconventional, creative thinking to drive Innovations. Ironically, to think of the box, we need to play in the sandbox. There can be any number of Innovations that exist in the sandbox.
There is no generic, one-size-fits-all sandbox design—as each industry, market, and business is different.
Here is an example of an Innovation Sandbox built for the India Healthcare Industry. On this slide, we have laid out the 4 constraints, plus 7 interrelated Business Model Innovations.
The India Healthcare Industry is an ideal environment to apply the Innovation Sandbox, as the constraints are obvious and extreme. More specifically, India, the second largest country in the world with a population of 1.38B people, is notorious for poor public health with numerous ailments at epidemic proportions and a scarcity of healthcare professionals. Among India’s healthcare issues include:
- High spread of HIV/AIDS
- High rates of infant mortality
- Over 6 million blind people
- Over 50 million malnourished children
- Over 100 million patients with type 2 diabetes
- Over 80% of the population cannot afford the costs of healthcare
- Health insurance unavailable to most people
- Ratio of physicians to total population less than 1 per 100,000 people
Furthermore, about 70% of the population live in rural and semi-urban areas that can be difficult to reach.
One example of a company that abides these constrains and drove such Innovations within the India Healthcare Industry is Jaipur Foot. Jaipur Foot produces a prosthetic foot made form rubber, intended for below-the-knee amputees, such as people injured by accidents and land mines. A foot costs about $30. Compare this to the $8,000 to $10,000 price of a similar Western prosthesis. This over a 99% reduction in price! In a year, the company performs about 16,000 procedures.
Another great example is Aravind Eye Care. Aravind is the world largest provider of cataract surgery. In a year, the company performs 240,000 surgeries and treats 1.6MM outpatients. Aravind treats over 60% of its patients free of charge—and the company still operates profitably!
These results seem almost too good to be true. But, following the Spartan Sandbox Innovation approach, it is possible. In fact, organizations in any industry, in any country, can adopt the Sandbox Innovation approach to breakthrough Innovation.
To elevate your chances of success requires 5 core guiding principles that management must follow:
- Radically rethink the entire business model.
- Immerse themselves in the lives of the target consumers.
- Accept constraints.
- Do not innovation in solation
- Be fully committed to a strategic intent.
In particular, I want to highlight this 3rd principle–accept the constraints! Contrary to some beliefs, breakthrough creativity requires an explicit acknowledgment of the constraints and limits. The zone of comfort drives away the zone of opportunity. With extreme constraints, we are forced out of the zone of comfort.
Also, remember, our organization cannot do all things. We must do a few things very well.
Are you interested in learning more about how to apply the Sandbox Innovation, as well as a deeper dive into the India Healthcare case study? We have a framework presentation that dives deeper in the FlevyPro Library, found here: Innovation Sandbox. It is a fully editable PowerPoint presentation and also also includes slide templates for you to use in your own business presentations.
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To be competitive and sustain growth, we need to constantly develop new products, services, processes, technologies, and business models. In other words, we need to constantly innovate.
Ironically, the more we grow, the harder it becomes to innovate. Large organizations tend to be far better executors than they are innovators. To effectively manage the Innovation process, we need to master both the art and science of Innovation. Only then can we leverage Innovation as a Competitive Advantage, instead of viewing Innovation as a potential disruptive threat.
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About David TangDavid Tang is an entrepreneur and management consultant. His current focus is Flevy, the marketplace for business best practices (e.g. frameworks & methodologies, presentation templates, financial models). Prior to Flevy, David worked as a management consultant for 8 years. His consulting experience spans corporate strategy, marketing, operations, change management, and IT; both domestic and international (EMEA + APAC). Industries served include Media & Entertainment, Telecommunications, Consumer Products/Retail, High-Tech, Life Sciences, and Business Services. You can connect with David here on LinkedIn.
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